Before diving into technical analysis on the cryptocurrency market, we would like to bring to your attention today’s biggest crypto news…
Fidelity announced on Tuesday morning that they are moving to offer Bitcoin (BTC) to their 401(k) retirement accounts. This move makes Fidelity the first major retirement plan provider to offer crypto assets to their clients.
Reportedly, Fidelity plans to allow accounts to allocate up to 20% of their 401(k) to Bitcoin. With roughly $2.4 trillion in Fidelity’s network of retirement accounts, maximum exposure of 20% would be an estimated $480 billion of theoretical cash flow into the crypto market. More likely is to eventually see somewhere between 3-7% of any given retirement account allocated towards cryptocurrencies, which is still nothing to take lightly.
Bitcoin…
Correlated, but Outperforming Stock Indexes and Sectors
Well, the weekend wasn’t too nice to the 24/7 crypto market. Bitcoin broke down and closed below its significant 2022 trend that had been intact since January.
The good thing is that momentum is still building according to the 50/200 Real Motion indicator. Price on the other hand is in a sticky situation, selling off nearly to the bottom of the BTC parallel trading range. It wouldn’t be surprising to see a brief retest of support down to $37,000 (outside of the parallel trading range), however, a continued breakdown below this level in the immediate future is still relatively unlikely.
Simply put, Bitcoin and cryptocurrencies, in general, are still risk assets and trade as such. The easiest way to understand this is by simply comparing Bitcoin to the Nasdaq 100 on an intraday basis.
On a 5-minute timeframe, BTC was over 70% correlated to QQQ price action for the majority of the day on Monday. Cryptocurrencies may trade all day, but you can almost guarantee that on any given weekday Bitcoin will track the pace and trend of US Equities during New York market hours.
Thanks to the current state of global affairs (or lack thereof), all equity markets are under continuous inflationary pressures, and cryptocurrencies are no exception. Bitcoin is down around -12.5% YTD, which really is not too bad when compared to other growth industries including Clean Energy (PBW -30% YTD), Electric Vehicles (DRIV -24% YTD), Biotechnology (IBB -37% YTD), and Cannabis (MSOS -21% YTD).
The point is that this range bound price action on BTC is nothing to be afraid of, especially when it is outperforming nearly every other risk asset on a relative basis (Including SPY -12.5% & QQQ -20% YTD). If anything, BTC remaining range bound in its parallel channel allows the opportunity for swing traders to seriously take advantage of buying the troughs and selling the peaks. Aside from that, we are still waiting for a break either above $48,000 or below $35,000 before we are confident in determining the crypto market’s next macro trend.
Given the selloff in the stock market today, we’re likely going to see BTC breakdown to at least $37,500 in the next 48 hours. Let’s hope not.
The Best Opportunity to Gain Exposure to the
World’s Most Successful NFT Project.
The most excitement that the crypto market has seen over the past week or so has actually been in ‘meme’ coins. Dogecoin (DOGE) and ApeCoin (APE) have both been benefiting from recent news, with Dogecoin often being boosted when Elon Musk makes the news and APE being one of the hottest new cryptocurrencies there is.
Elon Musk’s acquisition of Twitter was followed with rumors that Elon would create new functionality on the Twitter platform that would incorporate DOGE for payments (ie. tipping, e-commerce, etc.). This hasn’t been debunked and still very well could be true, but is it enough of a reason to buy DOGE? For now, we’ll have to wait and see.
ApeCoin is an interesting opportunity to get exposure to a peripheral sector of the cryptocurrency industry, which is NFTs. APE is a utility/governance token that is issued by the Bored Ape Yacht Club (BAYC) NFT project, and is currently trading around $18.
After launching just a month ago, APE is already sitting at around a $5.2 billion market cap with roughly $2 billion in average daily trading volume. With an NFT from the BAYC collection costing about 140 ETH or $400,000, buying APE may be the best opportunity to gain exposure to the world’s most successful NFT project.
APE may turn out to be a bust just like many other non-technology based cryptocurrencies over the years, but if you think that the NFT market still has long-term potential then this may be something to check out!
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